Sir Mervyn today told MPs: "Banks need to think very carefully about relationships they have with supervisors. I don’t think banks should conduct conversations with supervisors through front pages of FT or any other newspaper. Banks shouldn’t leave conversations with supervisors and feel next step is to phone Number 10 or Number 11 Downing Street. There were certainly calls made to Number 11 and in some cases to Number 10.

Andrew Tyrie, the chairman of the Treasury Committee, immediately went to the House of Commons to ask Mr Osborne whether he had taken part in such a lobbying operating.

He said Sir Mervyn had indicated that "unacceptable pressure had been brought to bear on the Preudential Regulation Authority from within government at the bhest of the banks, putting at risk the regulator's independence".

"Will the chancellor reassure the house that he knew nothing about this, that he was not personally involved and that he will investigate the allegation that others did bring unacceptable pressure and report to parliament?" Mr Tyrie said.

However, Mr Osborne gave no such reassurances and defended the right of banks to "make their case".

"if there's unacceptable pressure, I absolutely say that is not acceptable," he said. "The PRA is completely independent and it's made its independent dceisions on capital in our banks. We empower our regulators to do their job.

He added: "Of course, banks, consumer groups, anyone else can make their case. But ultimately it's an independent body that makes the judgement. that is the system we have created."